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Emerging and Frontier Markets DataWed, 20 Mar 2019 00:36:50 +0000en-UShourly1New Pirates of the Caribbean: Venezuelan Coast Descending Into Chaoshttps://frontera.net/news/latam/new-pirates-of-the-caribbean-venezuelan-coast-descending-into-chaos/
https://frontera.net/news/latam/new-pirates-of-the-caribbean-venezuelan-coast-descending-into-chaos/#respondWed, 20 Mar 2019 00:36:50 +0000https://frontera.net/?p=35261We often associate pirates with Blackbeard’s cutlass or a Somali fisherman’s Kalashnikov. However, their next hotspot could well be the turbulent coast of Venezuela. Globally, the threat of piracy, particularly that posed by armed groups from Somalia in the Indian Ocean, has been tackled with impressive and effective joint international efforts. In some parts of the world […]

]]>We often associate pirates with Blackbeard’s cutlass or a Somali fisherman’s Kalashnikov. However, their next hotspot could well be the turbulent coast of Venezuela. Globally, the threat of piracy, particularly that posed by armed groups from Somalia in the Indian Ocean, has been tackled with impressive and effective joint international efforts. In some parts of the world like the Caribbean, however, instability is growing.

The Threat Has Moved From Somalia

Maritime attacks around the Horn of Africa peaked in 2011 with 275 attacks, costing businesses and insurers $8.3bn. Since then, violent maritime incidents in the Horn of Africa have been in a steady state of decline. For instance, records show that Somali pirates took part in only 9 hijackings in 2017. This is mostly thanks to anti-piracy operations carried out by the European Naval Force, NATO and even Russia, following a decision by the UN Security Council to allow warships to enter Somali territorial waters.

In fact, the waters surrounding the Horn of Africa turned into a playground. The world’s navies showed off their artillery, both to their allies and rivals, while united against a common enemy. This global “armada” proved more than sufficient as a deterrent for the disgruntled fisherman and low-ranking militiamen-turned pirates.

The raw materials that facilitate the rise of piracy, however, are not unique to the Horn of Africa. Instability and economic crisis through Latin America is causing the region to spiral towards maritime instability.

Instability in Latin America

Venezuela, meanwhile, is descending into chaos, both onshore and offshore. Without an equal amount of intervention, lawlessness along the Caribbean coast will continue to transfer from land to sea. This includes the same commitment of time, resources and naval power. Moreover, conditions across the country as a whole have worsened consistently. Since 2013, Venezuela has lost half of its economy. Unemployment is approaching 30%, even as the price of goods rises by 13,000%. Similarly, inflation for 2019 is estimated to reach 10 million percent.

Like most variants of prolonged criminality, piracy often stems from political and economic instability. Latin America is no stranger to such uncertainty. Political upheaval across the region is on the rise, ranging from Haiti, Nicaragua, and of course Venezuela.

A report on the issue non-profit found there to be 71 major maritime incidents in Latin America and the Caribbean in 2017, up 163 percent from the previous year. The Caribbean coast off Venezuela hosted the majority of these attacks, with Saint Vincent, Colombia, St. Lucia and The Grenadines also being hot spots of piracy in the region.

The Looming Piracy Crisis

Jeremy McDermott, co-director of Insight Crime, a nonprofit that studies organized crime in Latin America and the Caribbean, has called the coast of Venezuela “criminal chaos”. The incidents are not just low-level scavenging but often orchestrated, violent and at times lethal pirate attacks. One such act saw at least a dozen fisherman killed in May of last year. Four boats traveling from neighboring Guyana to Suriname were attacked by pirates in what the Guyanese President described as a “massacre”.

Venezuelan waters have not always been so troublesome. In the late 1980s, the fishing industry in the South American coastal state was booming. During this time, Venezuela found itself to be the fourth-largest producer of tuna in the world. The thriving business took a dramatic hit, however, following the nationalization of Pelscapa, Venezuela’s largest fishing company.

Institutionalized State corruption and poor management led to a complete breakdown of a once-thriving industry. Private companies began to disappear from the docks. As a result, life for those relying on the Caribbean coast for their livelihood became harder.

Desperation is growing. Piracy along the Caribbean coast could provide opportunities for Venezuelans to acquire goods, food or currency from the outside world. The situation has become so bleak that many of the piracy attacks are now believed to be sanctioned by, or have direct involvement from, corrupt Venezuelan officials. This is reminiscent of the surge in Somali piracy from over a decade ago, where the lack of an effective government, following the collapse of the Siad Barrie regime in 1991, led to a deterioration in public institutions, the rule of law and, critically, the Somali navy.

Assessing the spillover effects

International attention focuses on the emerging refugee crisis and the potential toppling of the Maduro regime. It also acknowledges the high probability of mass starvation under these conditions. Even so, the turbulent coast does not receive the same level of attention. If the threat of piracy from Venezuela continues, its struggling neighbors will also experience this instability. States such as Guyana, Suriname and Trinidad and Tobago already face substantial maritime risk from piracy, drug, and weapon smuggling. Their coastal-focused economies cannot afford any further rise in risks as such.

Furthermore, officials in these countries have already expressed concern on growing key issues. This includes the influx of automatic weapons and hard drugs flowing in from the Venezuelan cartels. The seas throughout the Caribbean become less stable and more difficult to police. Organized crime groups, Venezuelan government officials, and increasingly desperate fisherman from the coastal state will exploit any opportunity available.

Cooperation between the governments of Suriname and Guyana have previously wielded success in combating piracy in the region. International support should seek to empower cooperation with and between states suffering the most from the threat of piracy. A joint international response has indeed brought a deterrent to Somalia. Even so, the strong presence of ships can only last for so long. Instability, economic desperation and empowering the navies of Venezuela’s neighbors are all needed to combat the threat.

No doubt, the emerging refugee crisis will necessitate a strong naval presence soon, as land borders become increasingly fortified. For both these reasons, the region needs an immediate and pre-emptive deployment of naval vessels. These vessels should focus on combating piracy like that in Somalia before Venezuela itself collapses completely.

Nathan Paul Southern is a security analyst and investigative reporter. He holds a BA in Criminology from Caledonian University, a law degree from the University of Strathclyde and an MSc in Global Security from the University of Glasgow. Article as originally appears https://globalriskinsights.com/2019/03/pirates-caribbean-venezuela-piracy/

]]>https://frontera.net/news/latam/new-pirates-of-the-caribbean-venezuelan-coast-descending-into-chaos/feed/0Frontier Markets Investment Portfolio: A Mining Site in Northern Myanmarhttps://frontera.net/news/frontier-markets-investment-portfolio-a-mining-site-in-northern-myanmar/
Tue, 19 Feb 2019 20:45:59 +0000https://frontera.net/?p=35242Asia Frontier Capital’s Regional Investment Analyst Scott Osheroff recently traveled to northern Myanmar to visit the mine site of one of its portfolio companies. Myanmar – Liberalization begins to unfold The National League for Democracy (NLD) seems to have potentially finally come to the realization that the economy is suffering and therefore that their party […]

]]>Asia Frontier Capital’s Regional Investment Analyst Scott Osheroff recently traveled to northern Myanmar to visit the mine site of one of its portfolio companies.

Myanmar – Liberalization begins to unfold

The National League for Democracy (NLD) seems to have potentially finally come to the realization that the economy is suffering and therefore that their party is at risk of losing a number of seats in the 2020 elections. This has led the NLD to liberalize several sectors of the economy recently, namely allowing foreign banks to lend locally and announcing the liberalization of the insurance sector from 1st April 2019 while holding the Invest Myanmar conference in Naypyidaw at the end of January where Aung San Suu Kyi marketed the country as being open for business.

With GDP growth for 2019 revised down to 6.3%, the economy is still growing robustly. However, with several armed conflicts continuing in the country, Myanmar is at risk of losing its General Scheme of Preferences (GSP) to the EU which could impact the garment sector which contributes nearly 80% of exports.

However, the long term opportunity in Myanmar is still very clear and while the country may not become a manufacturing destination like Vietnam or Bangladesh due to its high land prices, inefficient logistics and unreliable electricity supply, Myanmar has an opportunity to build a more diversified economy covering agriculture (as it was the largest rice producer in the world in the middle of the last Century), natural resources, tourism and logistics, the latter of which will require significant investment but which the Chinese are keen to assist with.

The economy appears to be showing some early signs of a recovery this year relative to the slowdown experienced in 2018 and we expect this to continue if the reforms the NLD announced come to fruition, especially with the liberalization of the insurance sector as this could potentially bring hundreds of millions of dollars of much needed FDI to the country and act as a new area for employment. The consumer opportunity in the country also remains untapped given a large population of 53 mln people and a median age of 28 whose disposable incomes are rising from a low base.

Myanmar Travel Report

To quote a friend in the Myanmar mining industry, “If you want to find elephant-sized mineral deposits, then go hunting in elephant country”. Without a doubt, Myanmar is elephant country.

In January I was invited on a site visit to the Bawdwin mine in northern Shan State, majority owned by Australian-listed Myanmar Metals (ASX: MYL) but whose history dates back to 1412 when early Chinese miners used primitive methods to mine an elephant of a lead/zinc/silver deposit with bonanza grades of greater than 800 grams per ton of silver. Having been an informal operation for hundreds of years, in the early 1900’s the area was developed into a world class mine, making it the single largest lead, zinc, and silver producer in the world pre-World War II era. A true time capsule which well illustrates many aspects of Myanmar, the Bawdwin mine’s development was led by Herbert Hoover (prior to his 1929 US presidency) and it ultimately fell into the hands of the Japanese during World War II, before being nationalized by the then Socialist Burmese government. Only in 2009 was the mining license sold to a private company with the aim of putting Bawdwin back into production. This led the company in 2015 to partner with MYL who is footing the bill to prove up the existing resource and put this behemoth of a mine back into production.

Nothing in Myanmar is simple, neither the politics, the culture, nor the landscape. As such, it was only appropriate that as our ATR took off from Yangon International Airport to Lashio, the capital of Northern Shan State, we would not be flying direct, but rather doing a puddle jump through Heho airport in Southern Shan State (home of the famous Inya Lake) and then continuing onward to Lashio. Having spent time in South Shan before, I was looking forward to being in North Shan as it is a region steeped in a fascinating history of immense mineral wealth, fiefdoms and happens to be the regional birthplace of many of Myanmar’s current tycoons.

Landing in Lashio airport around 15:00 the group I was with had to go through immigration (even though we never left the country), something I always found strange in Myanmar for our hotel still registers us with immigration and if we were to drive instead of fly to Lashio the same bureaucratic procedure would not have applied. But after all, this is Myanmar, a country where you learn to not question the out of the ordinary.

After gathering into two cars we drove to visit a zinc refinery on the outskirts of town. A Burmese and Chinese partnership, the zinc refinery is modest in size, but has been processing the tailings of the Bawdwin mine which are still rich in zinc. The management and workers were mostly Chinese which makes sense as China has a big and growing influence in Shan, as well as this refinery being less than 200km from the Chinese border meaning China is the natural buyer of most materials produced in the region.

Lashio zinc refinery

As we returned from the refinery to Lashio the sky was painted a fiery red due to all of the slash and burn agriculture which made for a spectacular sunset. With the sun going down we decided to spend the night in Lashio as the road to Bawdwin is full of switchbacks amid second growth jungle and in this part of Myanmar you never know when an ethnic rebel group might decide to set up an unofficial roadblock at night…foreigners would be a good bounty.

The next morning, we set out at 06:30 for Bawdwin. On the outskirts of Lashio we passed a Tatmadaw checkpoint (Burmese military) and set off on the four-hour journey of winding road through gorgeous country. We passed through what during the rainy season would be neon green terraced rice paddy and small villages where oxen are still the main mode of transport. Toward the end of our journey we passed through the town of Namtu (which we revisited later in our trip) and made our final push up a mountain pass to Bawdwin.

Crossing the Namtu River

After four hours driving switchbacks it was great to finally arrive at the mine as we drove through the old open pit mining operation (China pit) through to Bawdwin village which is located on the mining concession and is home to 3,000 people, approximately 1,000 of whom are employees. Settling into our sleeping quarters we were given the “luxury suite” on the hillside overlooking the valley. The “luxury suite” was a bit of a hike but worth it as it had a great view of the valley and was the old management house, constructed of old growth teak and which Herbert Hoover used to call home.

Before lunch we took a tour of China pit and looked at MYL’s prospective new areas of mineralization, of which there are several as the lead/zinc/silver geology at Bawdwin extends over a wide area, even onto the license adjacent to theirs.

China Pit

In the afternoon we took a several hour stroll through Bawdwin village and down a gorge where old adits still remained from Chinese miners, as well as the occasional piece of slag, as we worked our way to Tiger camp. What was remarkable about Tiger camp is that all of the old equipment still largely worked as we were shown first hand. This is machinery which in many cases is 100 years old! The machinery and the trains all run, which would normally not be the case in a ghost town-type situation. This is because when the government nationalized the mine in the middle of the last Century it was put under the ire of state-owned enterprise Mining Enterprise No.1 which means there were workers posted at the mine to keep everything pretty much in working order.

Tiger tunnel mine entrance

After exploring Tiger camp and walking along the railroad tracks down the gorge, we headed back to Bawdwin village where we enjoyed an evening of hot pot and a round of bowling on Hoover’s alley, complete with teak construction and manual pin reset.

Waking up in Bawdwin the next morning it was quite chilly as the Shan plateau is over 1,000 meters above sea level. After a simple breakfast we headed out to see where MYL plans to set up a concentrator before they haul the concentrate back to Namtu, the nearest town. After seeing the site, we departed the mine site and made our way to Namtu to see the old railroad yard and zinc smelter which was pretty spectacular, complete with early 1900’s railroad engines which still work. The railroad yard sits at the base of the early smelter which was eventually shut down because the fumes from processing the ore caused a fair bit of pollution for the town sitting at its base, as one might imagine. Therefore, a new smelter was built on the other side of town of which only the old columns remain, for during WWII the Japanese occupied the area and in order to prevent them from successfully producing metals for their war effort the facility was bombed by the Americans.

Bawdwin’s old smelter

Railyard with working century-old locomotives

Departing Namtu, we began the long drive back to Lashio in order to catch our flight bound for Yangon which gave some time for all of us to reflect on the opportunity. Myanmar is no doubt elephant country for resource investors, though better government policies need to be put into place before the sector can really blossom. Plush with world class copper, tin, tungsten, gold, silver, oil, ruby and jade resource potential, I believe it is just a matter of time for the Myanmar government to wake up to the realization that if extracted properly, the country’s great mineral wealth could help diversify the economy, create significant employment opportunities and transform the lives of millions who call this “Golden Land” home.

]]>Nigeria Election May Produce ‘Two Venezuela-style Presidents’https://frontera.net/news/africa/nigeria-election-may-produce-two-venezuela-style-presidents/
Fri, 08 Feb 2019 21:21:38 +0000https://frontera.net/?p=35235The February 16 presidential elections in Nigeria, Africa’s largest democracy, may see two self-declared winners with the country sliding into a prolonged post-electoral crisis. The incumbent, President Muhammadu Buhari unwilling to leave power to an opposition he deems ‘corrupt’ is unlikely to yield even if he loses the poll. Conversely, the key opposition candidate, former […]

]]>The February 16 presidential elections in Nigeria, Africa’s largest democracy, may see two self-declared winners with the country sliding into a prolonged post-electoral crisis. The incumbent, President Muhammadu Buhari unwilling to leave power to an opposition he deems ‘corrupt’ is unlikely to yield even if he loses the poll. Conversely, the key opposition candidate, former Vice President Atiku Abubakar, who has assembled around him many of the country’s business oligarchs is unlikely to sail quietly into the political night. With the country’s Supreme Court engulfed in its own crisis of legitimacy and the Senate unable to convene, a Venezuela style crisis now seems almost inevitable. With both major candidates hailing from the mostly Muslim north, any post-electoral violence is likely to be focused on Nigeria’s major cities rather than along sectarian religious lines. A prolonged crisis may even invite a military intervention.

With most of the country’s pan-ethnic groups and business oligarchs backing the opposition and key democratic institutions delegitimized, much like in Venezuela, any post-poll challenge to Buhari will have plenty of financial resources and grievances to outlast any government crackdown or international appeals for calm.

In the event Mr. Buhari is declared the winner of the elections, the opposition is unlikely to appeal to the country’s courts since the institution has lost some of its legitimacy over the past month as the president has forcibly ousted the chief justice.

Already the Buhari administration has used the country’s tax authorities to freeze the bank accounts of many opposition liked businesses to forestall an oncoming lengthy well financed post-election challenge. Buhari’s pre-election draconian measures are probably not necessary, as a plurality of the Nigerian electorate still backs him according to DaMina Advisors proprietary synthetic election forecast models – which have in recent years accurately predicted the outcomes of many opaquely polled elections throughout Africa. Forced to choose between an incompetent “Mr Clean” and a corrupt “Mr Action,” while the Nigerian elites prefer Abubakar, a majority of the country’s poor voters, who form the vast majority of voters, still prefer Buhari.

]]>US Sanctions on Venezuela’s PdVSA Won’t Have Iran-Type Bitehttps://frontera.net/news/latam/us-sanctions-on-venezuelas-pdvsa-wont-have-iran-type-bite/
Thu, 07 Feb 2019 07:03:46 +0000https://frontera.net/?p=35230The 28 January decision by the Trump administration to impose sanctions against Venezuelan state-owned oil company Petroleos de Venezuela (PdVSA) will have only a small impact on crude oil prices. The sanctions do not have the same effect as those recently imposed on Iran. The most likely path for Venezuelan oil production over the next […]

]]>The 28 January decision by the Trump administration to impose sanctions against Venezuelan state-owned oil company Petroleos de Venezuela (PdVSA) will have only a small impact on crude oil prices. The sanctions do not have the same effect as those recently imposed on Iran. The most likely path for Venezuelan oil production over the next year is still one of a steady decline, rather than an abrupt breakpoint, which would hold true whether or not President Nicolas Maduro is able to cling to power. Regime change in Venezuela will not immediately turnaround the country’s oil production outlook.

US sanctions do not target exports to non-US buyers

While the sanctions announced are broad, they do not have a secondary impact beyond the US, unlike US sanctions on Iran which threatened to punish buyers of Iranian crude oil who did not have waivers approved by the US. In this case, all US companies are prevented from doing business with PdVSA, which includes both purchases of crude oil and sales of diluents such as light crude or naphtha, which are used to make the extremely heavy and viscous Venezuelan crude more able to flow. Both of these disruptions to normal patterns of trade with the US will impose major costs on PdVSA, but neither presents a problem which they are unable to solve. There are only a limited number of destinations for Venezuelan heavy crude, due to the need for refiners to have heavy coker units capable of handling this grade – most do not. Most of the non-US coking capacity is located in China and India, both of which have already been purchasing substantial volumes of Venezuelan crude oil already. Venezuelan crude in both of those markets competes against the heaviest Middle Eastern grades, particularly Basra Heavy from southern Iraq.

For the US refiners affected, there will be a modest reduction in profitability, but they can adapt, and the process had already begun. With the continuing declines in Venezuelan production in recent years, volumes exported to the US had already fallen from around 500,000 as an average last year to around 350,000 in January, based on preliminary figures. Now, the impacted refiners are scrambling to find alternate supplies. Valero already has announced increased purchases of heavy crude from Canada, though that is still limited on the Gulf Coast due to the logistical hurdle of limited pipeline capacity in the absence of the long-delayed Keystone XL pipeline. Much of that volume will have to come from the Middle East. With Saudi shipments to the US curtailed by the OPEC+ cuts, it is probable that imports from Iraq will surge.

Chinese and Indian refiners now have the opportunity to pick up distressed Venezuelan crude at a heavy discount, and will do so at the right price, diverting some of their usual Middle Eastern heavy supply to the US. Venezuela also will be forced to buy diluents from further afield, and light crudes in the Atlantic Basin, possibly from Nigeria, could begin moving West in small volumes.

The net short-term impact is a significant loss of revenue for PdVSA and the Maduro government, and a relatively modest but measurable cost impact on a few US refiners.

Venezuela is not another Libya

A few analysts have raised the analogy between the current situation in Venezuela and the chaos in Libya since the beginning of the civil war in 2011, which has resulted in wild swings in production in both directions. That analogy is a very strained one.

While there is certainly the possibility of violence and even limited civil war in Venezuela, the most probable scenario is that the Maduro government is able to cling to power in the immediate future before an eventual collapse. Venezuelan oil production is already falling steadily based on natural declines and the near-halt to upstream development and most maintenance activity. That has already taken place and the impact is accumulating, but is already accounted for in market expectations and forecasts of near-term supply balances.

It is difficult to envision a scenario in which Venezuela’s remaining oil production falls off more precipitously. The opposition is seeking to lure the military away from supporting Maduro, but thus far it is getting little apparent traction. Even if it did, there is no indication that anyone is planning to try to intentionally damage oil infrastructure or use it as leverage. Another difference from Libya is that PdVSA’s management is thoroughly pro-Maduro, which would preclude a situation like Libya, where the Libyan NOC has acted as a neutral steward of resources and has been supported by the international community in that neutral role, even as the conflict has continued.

Conversely, an upside surprise in Venezuelan production based on a change in government is almost impossible. Removal of sanctions would allow an opposition-led government to begin limited upstream maintenance activities in short order, but there is no “shut-in” capacity to bring back online, as there was in great quantity during some periods in the Libyan conflict. It would take 2-3 years to set up a new legal regime for foreign investment and start to hold bid rounds, and the long lead times for development mean that major production increases would be 5+ years off. The initial impact would be halting the decline and very modest and gradual increases at best.

]]>UAE’s Relations with Somalia Are Floundering Over Qatarhttps://frontera.net/political-risk/uaes-relations-with-somalia-are-floundering-over-qatar/
Tue, 05 Feb 2019 05:22:40 +0000https://frontera.net/?p=35224Since the election of the new Somali President in 2017, the country’s relationship with the UAE has deteriorated steadily. The wealthy Gulf state seems determined to punish the war-torn coastal nation for refusing to take sides in its diplomatic dispute with Qatar, actively withdrawing military support. Consequently, the UAE risks undoing its record of progress […]

]]>Since the election of the new Somali President in 2017, the country’s relationship with the UAE has deteriorated steadily. The wealthy Gulf state seems determined to punish the war-torn coastal nation for refusing to take sides in its diplomatic dispute with Qatar, actively withdrawing military support. Consequently, the UAE risks undoing its record of progress in the Horn of Africa.

The 2017 election of Somali President Mohamed Abdullahi Mohamed came amidst heightened tensions between Qatar and its neighbors in the Gulf. The leading antagonists of the standoff, Saudi Arabia and the UAE, pushed for their allies in the region to cut ties with Qatar. Instead, Abdullahi Mohamed made a point of declaring neutrality in the conflict after his inauguration. The UAE and Saudi Arabia would likely have preferred for the new President not to have announced this publicly and continue to trade quietly with Qatar, while not causing the rival Gulf States to lose face. The President was, however, in a highly unfavorable dilemma. He is likely to have made this declaration as a subtle gesture of solidarity with Turkey, Somalia’s largest foreign investor, which supports Qatar in the diplomatic crisis. Yet in doing so, he provoked the UAE, which is Somalia’s biggest trading partner.

Following the Somali President’s perceived slight, the UAE increased its support for the President’s rivals, in particular, the Federal Member States that challenge central Mogadishu rule. This support contributed to heightened tensions in the already fragile relationship between the government and the six Federal States. Such divisions serve to weaken governmental institutions, allowing militant groups like al-Shabaab to thrive. The UAE has since escalated this rift by cutting aid programmes and withdrawing personnel from the Somali capital, Mogadishu.

Somaliland port highlights divisions

These tensions came to a head in the sleepy port town of Berbera, in the self-declared independent state of Somaliland. The port, where the UAE is building a large military base, is strategically important due its close proximity to Yemen, where the UAE is part of the ongoing Saudi-led coalition against Houthi rebels. The port also holds economic importance, as the Dubai-based DP World is set to take over its management with a view to exporting huge amounts of livestock to the Gulf each year.

In April of last year, the Somali government nullified the agreement between DP World and Somaliland for control of the port. The Somali Foreign Minister, Ahmed Isse Awad, accused the UAE of being arrogant and disrespectful while arguing that DP World cannot legally sign the agreement without the consent of Mogadishu. Nevertheless, the UAE and DP World remain set on fulfilling their ambitions in Somaliland and began construction on the port expansion in October. Despite the opposition from the Somali government, Abu Dhabi is fully aware that Abdullahi Mohamed holds little real influence in the autonomous Somaliland region and is unable to prevent progress of the project.

Such brazen dismissal of Abdullahi Mohamed’s demands serves to undermine his government’s authority. If Somalia’s biggest trading partner, an economic superpower in the region, does not acknowledge the President’s leadership over his own country, then efforts to consolidate power away from the capital become even more fractured.

Somali security forces seize almost $10 million from UAE

In an overt, relative snub of the wealthy Arab state, Somali security forces seized a civilian aircraft in April, confiscating $9.6 million held in unmarked bags. Mogadishu claimed that the bags were suspicious and had been handed over to the relevant authorities, while the UAE claimed the money was allocated to support the Somali army and accused the security forces of holding those on the plane at gunpoint. The move effectively brought an end to military cooperation between the two states.

The UAE’s mission in Somalia aimed to support African Union troops fighting off the al-Shabaab insurgency. By scrapping the military training program, which has existed since 2014, Abu Dhabi could threaten the progress it has fostered to date. What’s more, the UAE is creating a void for foreign military support that its rivals are already trying to fill.

In 2017 Turkey opened its biggest overseas military base, in Mogadishu, with the capacity to train 10,000 troops. The base had already opened when the UAE withdrew its troops and the move simply provided Ankara with a leading role to fill in the country.

Turkey and Somalia’s ties have strengthened in recent years. In 2010, Turkish exports to Somalia were worth a little over $5 million. By 2016 they had totaled over $123 million. Mogadishu has also praised Turkey’s infrastructure investment into the country, while Ankara has done well to win the hearts and minds of many Somalis due its vast aid effort at the height of the 2011 famine. If Abu Dhabi continues to punish Abdullahi Mohamed for not choosing a side, then it will lose its strategic edge and simply hand over influence to rival Turkey.

Opposition tries to capitalize on diplomatic row

Somali opposition groups are seizing on the soured relations between Abdullahi Mohamed’s government and Abu Dhabi by accusing the government of actively moving towards the Turkish-Qatari alliance and thus endangering their vital relationship with other Gulf States. Ahmed Madobe, President of the Jubaland region in Somalia, expressed his support for the UAE back in May, while criticizing the diplomatic strategy of Mogadishu. Abdullahi Mohamed’s rivals will likely continue to exploit this fractured relationship as they push for increased support from Gulf States in their efforts to expand influence within Somalia. If the UAE develops more relationship with local leaders, like it has done with Puntland, then it risks calling into question the legitimacy of Abdullahi Mohamed’s government and thus provide more incentive for conflict and power grabbing.

The UAE needs to be aware that it is playing with fire if it exploits these divisions. Disrupting the fragile state of stability that Somalia is slowly working towards does nothing for the UAE’s ambition to be seen as a key peace broker in the region. The same can be said over the UAE’s refusal to take responsibility for its role in militant funding in the country.

Al Shabaab’s trade in charcoal

The demand for charcoal from wealthy Gulf States creates a steady stream of revenue for the militant group al-Shabaab, through the illegal Somali charcoal trade. UN estimates suggest that al-Shabaab earns an annual $7.5 million from taxing the trade that satisfies the demands of numerous Gulf States such as the UAE, Saudi Arabia and Oman by transiting the product through Iran.

In 2012 the United Nations administered a ban on charcoal exports from Somalia. The UN ban, backed by the Federal Government of Somalia (FGS), was an attempt to both curb the environmental damage that charcoal exploitation has on the country’s ecosystem and cut off a major source of funding for al-Shabaab.

Although the ban had some initial success in reducing the export of charcoal, there has been a noticeable re-emergence of the trade in the past two years. The illegal industry is heavily taxed by al-Shabaab in areas that are under their control, generating millions of dollars for the militants and becoming one of their greatest sources of revenue.

Al-Shabaab facilitates the illicit trade by transiting it through Iran to obtain fake origin certificates and thus bypassing the sanctions. It is packaged and labeled ‘Product of Iran,’ and accompanied by forged certificates certifying that the goods come from African States such as Comoros, Ivory Coast and Ghana.

Black market Somali charcoal exports are worth around $150 million a year in the UAE alone. The UAE has refused to make a statement regarding the UN Report and are yet to implement any new measures to restrict the flow of illicit charcoal following the report’s findings.

The UAE’s refusal to acknowledge its role in financing al-Shabaab is likely another snub aimed at Abdullahi Mohamed’s government. Yet, it is a short-sighted move that curbs Abu Dhabi’s strategic goals in the Horn of Africa. This could be an opportunity for the UAE to take the lead in combating a primary funding source for al-Shabaab and, following the withdrawal of military support to Somalia, show that they are still committed to combating terrorism in the region.

Outlook

Somalia is not important enough to the UAE or its friends in the Gulf to prioritize its needs over a heated diplomatic row with Qatar. Yet cutting off funding for al-Shabaab is something that the UAE can contribute towards and in doing so can solidify their role as a key player in combating terrorism in the region.

The UAE had great success in brokering the peace deal between Eritrea and Ethiopia last year and continues to be a key player in the ongoing Yemen conflict. Abu Dhabi is on a quest to be seen as a regional power and has the resources and influence to secure this reputation. Using Somalia as a pawn in their rift with Qatar weakens their position as a state genuinely dedicated to bringing peace to the Horn of Africa. It would be wise to repair their fractured relationship with Abdullahi Mohamed’s government before they begin to appear as a destabilizing force in the region.

Nathan Paul Southern is a security analyst. He holds a BA in Criminology from Caledonian University, a law degree from the University of Strathclyde and MSc in Global Security from the University of Glasgow.

As originally appears https://globalriskinsights.com/2019/02/uae-relations-with-somalia/

]]>Afghanistan is Currently At An Impasse — These Are the Options Going Forwardhttps://frontera.net/news/mena/afghanistan-is-currently-at-an-impasse-these-are-the-options-going-forward/
Tue, 29 Jan 2019 23:57:09 +0000https://frontera.net/?p=35220Failing peace initiatives, an emboldened Taliban controlling large swathes of Afghanistan, ineffectual and often corrupt authorities and regional players only really concerned about protecting their own interests – how after endless diplomacy and scores of billions in aid and military assistance have we ended up here? This week, the US announced that its recent talks […]

]]>Failing peace initiatives, an emboldened Taliban controlling large swathes of Afghanistan, ineffectual and often corrupt authorities and regional players only really concerned about protecting their own interests – how after endless diplomacy and scores of billions in aid and military assistance have we ended up here? This week, the US announced that its recent talks with the Taliban had made significant progress yet little appears to have been agreed. So is it time now to urge the Afghans to come up with a solution of their own making?

The country is currently at an impasse, due in large part to the stalemate between the Taliban and government forces. In terms of territory, the militants effectively control more territory than at any time since they lost power nearly 20 years ago, while the government’s writ runs in central, northern and north-eastern provinces and provincial capitals across the country – though the Taliban have demonstrated that they are able to overrun the latter at times, albeit until the military sends in reinforcements and airstrikes.

Ordinary Afghans have suffered appallingly from the relentless fighting. They are wary of getting caught up in the cross-fire and yearn for stability. I recall speaking to traders in Kabul not too long ago about their hopes and expectations. When asked what they most wanted, they said an end to the violence so they can get on with their lives. But they have little faith in the current government and even less faith in the Taliban.

The militants gained some degree of acceptance when they ran the country in the late 90s and early 2000s because they managed to maintain order and security, but most Afghans have little appetite for their puritanical ways and would not welcome a return to living under a regime with scant regard for the rights of women and girls. Of late the Taliban has been less hard-line in some districts they control, but this is hardly a sign of their becoming more enlightened rulers or, even less, buying into the democratic system the West is trying to consolidate in the country.

While the incompetence and corruption of successive governments have left them with much to answer for, the Taliban’s sheer aversion to political pluralism is largely why things are as bad as they are. Their leaders have no interest in any progressive dispensation, preferring to make common cause with other extremist groups that continue to exploit the vast ungoverned spaces in the country – for whom any notion of democracy is anathema. The Taliban has been vehemently opposed to elections, employing terrorism and other forms of intimidation to disrupt them. If one adds to this the repeated and claims of officials rigging ballots in their favor, then it is possible to question the credibility of Afghan ballots and, therefore, the legitimacy of the governments they elect.

The seemingly intractable domestic problems are not helped by the competing interests of Afghanistan’s neighbors who profess a desire to stabilize the country but essentially back one faction against the other. India and Pakistan have long been suspected of partisan support and now Tehran is entering the fray, reaching out to the Taliban in the hope that closer relations will help leave the east of Iran less exposed to terrorist attacks emanating from western Afghanistan.

Against this background, it is not surprising that the US administration is losing patience. Yet Donald Trump’s recent announcement to withdraw a contingent of American troops has more symbolic than strategic significance, as it will not alter the balance of power in the country nor persuade the Taliban – who want all NATO forces to leave not just the Americans – to become more actively and constructively engaged in pursuing a peaceful resolution of the Afghan conflict.

The US seems to be injecting renewed energy into the peace process and claims to have made a breakthrough in talks with Taliban representatives in Qatar last week – the latter reportedly pledging not to allow Afghanistan to be used as a safe haven by terrorist groups in the future. While welcome news, the militants have still not committed to a ceasefire nor are willing to recognize the Kabul government.

With presidential elections due in April, the country is bracing itself for yet another round of blood-letting and accusations of electoral fraud. Afghanistan is a democracy in name only. If rarely articulated publicly, it is what most observers believe. So is it not time to consider less orthodox approaches to breaking the seemingly endless cycle of instability? Ultimately, it is the Afghans who need to arrive at a settlement, and perhaps reverting to their traditional means of doing so, the Loya Jirga, a grand tribal council, should be considered under the current circumstances where all other options have effectively failed.

There is no guarantee that it would work. The Taliban and government representatives may set impossible preconditions, such as an insistence by the former that western forces leave before a Jirga can be convened – something that would not be countenanced for as long as the country is seen as a source of international terrorism.

But if a series of such consensus-buildings meetings were to go ahead, perhaps the outline of a mutually acceptable constitutional settlement would emerge. It is hard to predict what sort of ideas participants would come up with, but they will probably involve a high degree of power-sharing, perhaps in some form of quasi-federal system or even greater decentralization of political power. It will doubtless prove to be controversial, denounced in the West as submission to the Taliban. Yet if it receives broad acceptance within Afghanistan and stabilizes the country, it could at least begin to move forward and start realizing its potential.

And that potential is huge. Untapped mineral and energy deposits could generate considerable sums for the cash-strapped state while its geographic location would allow it to become an important transport hub for trade between China and the West with all the benefits of infrastructure investment that that would bring.

Some might argue that years of conflict will militate against a political settlement; that mutual distrust and grievances have hardened positions to the point of intransigence. That might all be true, yet Afghans, whatever their ethnic background, have a strong sense of nationhood and desire independence. A small glimmer of what might be possible occurred last year when a truce coinciding with the Muslim festival of Eid witnessed extraordinary scenes – members of the Taliban and Afghan security forces fraternizing and embracing each other in a number of provinces around the country. Left to themselves, with minimal intervention from the West, Afghans may surprise us all.

Jonathan Clare is a Senior Associate at Alaco, a London-based business intelligence consultancy.

]]>Serbia Protests Escalate Beyond “Stop the Bloody Shirts” — Is This Time Different?https://frontera.net/political-risk/serbia-protests-escalate-beyond-stop-the-bloody-shirts-is-this-time-different/
Mon, 28 Jan 2019 22:47:37 +0000https://frontera.net/?p=35217Since November 30, anti-government protests have been held across Serbia, including seven in the capital city of Belgrade. Thousands of people have attended. Previous protest campaigns against the current government have failed to bring real change. Will these protests be any different? Why are protests happening? The protests were initially sparked by an attack on opposition politician Borko Stefanović on […]

]]>Since November 30, anti-government protests have been held across Serbia, including seven in the capital city of Belgrade. Thousands of people have attended. Previous protest campaigns against the current government have failed to bring real change. Will these protests be any different?

Why are protests happening?

The protests were initially sparked by an attack on opposition politician Borko Stefanović on November 23th in Kruševac. Under the slogan “Stop the bloody shirts”, the protesters called for an end to political violence in Serbia. The aims of the protests immediately broadened to include many other grievances against the current government. The latest protest, held on January 16th, was timed to mark with the anniversary of the murder of Kosovo Serb politician Oliver Ivanović, a case still unsolved.

The organisers of the protests have made several demands including: an investigation into the murder of Oliver Ivanović; the resignation of Interior Minister Nebojša Stefanović; five minutes of coverage of the protesters by the state broadcaster; punishment of those responsible for beating Borko Stevanović; an investigation into the attempted murder of journalist Milan Jovanović, and for Vučić to publicly reveal a plan to resolve the Kosovo issue.

Dissatisfaction with the current regime has been rumbling for some time. Previous protests have also bought up the recurring issues of corruption, a lack of press freedom and attacks on journalists and opposition politicians. Most notably, the protests that followed the demolition of private property by masked men to make way for a huge government property development, which took place under the slogan “Let’s Not Drown Belgrade”. They similarly expanded to express broad dissatisfaction with the government before fading in popularity. A political party was formed from the protests to run in the 2018 Belgrade city assembly elections, but it did not pass the threshold to gain a single representative in the city assembly. Vučić’s inauguration as President in 2017, having previously served Prime Minister, was also accompanied by large protests.

The current protests have touched more areas outside of the capital city of Belgrade more effectively than previous campaigns. They began in Kruševac, a town in central Serbia, where Borko Stefanović was attacked. Protests have also been held in the largest southern city of Niš, the northern capital of Novi Sad and other towns across Serbia.

While previous protests mostly took place in summer, these have been held in winter, often in freezing temperatures. This indicates the motivation and strength of feeling among the protesters. Although they have not reached the size of the protests that toppled Slobodan Milošević in 1990s, comparisons are being made by the protesters and in media.

The government’s response

Vučić dismissed the protests as attempts by the opposition to bring down the government. Opposition leaders attended and supported them, but the organizers insist on their independence. Vučić disregarded the effectiveness of protesting, arguing that he will continue to pursue his current policies even if 5 million people are on the street. This comment prompted the protesters to adopt the slogan ‘1 of 5 million’.

Pro-government counter-protests have not managed to mobilize comparable numbers of people. However, Vučić used the visit of Russian President Vladimir Putin on January 17 as a counter-protest. Some members of the huge crowd of over 120,000 carried banners reading ‘1 of 300 million’, a retort to the ongoing protests that references a Serbian saying about the strength of Serbia and Russia’s ties. Putin is a strong supporter of the current regime. The huge attendance has been marked by accusations that civil servants and the employees of state-owned companies were pressurized into attending and transported by hundreds of buses at public expense.

What next?

Given Vučić’s willingness to ignore the protesters’ demands and wait for them to end (as he did with previous campaigns), the next step is crucial. It is far from clear what will be effective.

Previous attempts to form new opposition political parties have failed to gain wide support. An alliance with the opposition parties is possible, but many of their leaders did not live up to expectations when in power. Furthermore, they are riven with infighting and rivalries that prevent them from coming together. Such is the dominance of Vučić’s Serbian Progressive Party (SNS) in elections that he may look to break the deadlock with the protesters by calling an early election to demonstrate his strong popular support. He has yet to confirm this idea publicly.

The latest anti-government protest in Belgrade was one of the largest, suggesting that there is still support for further protests. As long as they remain once or twice weekly, however, the government will likely continue to ignore them. Previous campaigns suggest that the potential for the protest movement becoming a significant political movement is small. Therefore the protests are likely to continue in the short term. Nevertheless, they will probably fade later in the year unless either the government’s reactions or the strategy of the protesters changes to force the government to take more notice.

As originally appears https://globalriskinsights.com/2019/01/serbia-takes-to-the-streets-challenges-vucic/

Luke Bacigalupo is a political analyst currently based in Belgrade, Serbia. He holds degrees in South Eastern European Studies and Modern History from the University of Belgrade and the University of Oxford, respectively.

]]>President Macri’s “opening up to the world” Has Argentina in Economic Doldrumshttps://frontera.net/news/latam/president-macris-opening-up-to-the-world-has-argentina-in-economic-doldrums/
Thu, 24 Jan 2019 18:55:23 +0000https://frontera.net/?p=35213Argentina’s economy and political turmoil are on full display at the start of 2019. The country is in the midst of a difficult economic situation, which has led to a call for help to international creditors. The G-20 summit was a good opportunity to bring some stability and optimism to the country, but it did […]

]]>Argentina’s economy and political turmoil are on full display at the start of 2019. The country is in the midst of a difficult economic situation, which has led to a call for help to international creditors. The G-20 summit was a good opportunity to bring some stability and optimism to the country, but it did not deliver the expected results. The situation writes a difficult ending chapter for Mauricio Macri’s 2018, which will affect his re-election aspirations in 2019.

President Macri has significantly transformed Argentina since he inherited it from Cristina Fernandez de Kirchner in November 2015. He has promoted opening Argentina up to international markets and to foreign investment; this year’s host of the G-20 Summit has plans to attract more than 100 billion USD in foreign investment. However, investors and voters are becoming concerned about Macri’s capacity to stabilize a historically unstable economy. This has awoken past nightmares already represented in the books of Latin American political history: adjustment, impoverishment, popular resistance, repression, and social polarisation.

Argentina is suffering from severe economic stagnation due to the astonishing devaluation of the peso by more than 50% since the start of the year, triggered by President Macri’s “opening up to the world” with a deliberate devaluation of the peso towards the dollar policy, which benefited the export sectors and elites (key supporters of the Cambiemos government).

To try and stop this downward trend, the IMF agreed in June to the delivery of a 50 billion dollar loan for the rescue of the Argentinian economy. In return, Argentina is committed to meeting the deficit reduction targets agreed to with the IMF – most notably, decreasing the deficit to 0% from 4% of the GDP for 2019. The opposition and a huge part of the population have pushed back against this deal, which they view as “becoming a lackey of the IMF.”

Cambiemos, Macri’s party, achieved power with a strong neoliberal agenda, which reached it maximum expression on October 25th, with the 2019 Budget Plan of increasing taxation and cutting government spending to contain the deficit and regain trust of international markets. This decision reaffirmed the policies of social cuts that had already been implemented in 2018 as an IMF requirement.

Given the unpopularity of the measure, the budget debate was tense. After a 17-hour debate in a Congress of 256 members (108 of whom are Cambiemos), the Budget passed with 138 ayes, 103 nays, 8 abstentions and 7 non-attendances. After the debate in Congress, the much more divided Senate (only 25 out of 72 members are from Cambiemos) approved the plan on 15 November 2018, with 45 ayes and 24 nays.

Social unrest and decrease in popularity

It is clear that Argentina is living difficult times and has difficult times ahead. The 2018 budget foresaw an inflation of 15.7% and today’s most optimistic calculations speak of 32%; the peso should stabilize around 19:1 to the dollar but it has already broken the 40 peso barrier; and GDP will not rise 3.2%, as the government said last December, but it will fall 1%, at best. Macri’s promises and optimism have been shattered along the way, leaving him in a tough spot, unable to uphold his word and forced to apply unpopular measures, awaking the previously appeased population and transforming them into an irritated multitude.

No country in Latin America is as difficult as Argentina to implement unpopular reforms: The polls show that the majority of the population believes that the situation is now worse than in 2015, and the president’s popularity has plummeted over 35%, with the 2019 elections around the corner.

On top of that, Macri’s administration keeps receiving harsh criticism from important figures of Argentinian politics. Jorge Taiana, former chancellor, stated in a document presented on the 19th of November to the Senate by the group “Mundo Sur”, that the government has “followed a policy for three years that in practice only served to please financial capital and multilateral credit agencies”. These allegations do not come on their own. To many, Macri misinterpreted the world scenario, weakened the international position of Argentina, indebted the country, let the IMF return to be the center of its foreign policy, boycotted all the political and economic agreements of regional integration such as Mercosur, Unasur , Celac or Parlasur and abandoned the national and regional claim on the Falkland Islands, something that Argentinians will neither forget nor forgive.

The G-20 was a great opportunity to clear all the smoke and present a strong and committed government which could address both the situation in the country and host a major international event. However, it has turned out to be a deeper failure: The G-20 ended without a deal and it only exacerbated the differences between superpowers, important matters such as the sovereignty of the Falkland Islands were not discussed; Macri’s overtures of cooperation with Mercosur and the EU were dismissed; and – in the words of respected journalist Alfredo Zaiat – it was ultimately “a great theatre that Macri used to ask for more oxygen from Lagarde and Trump. His hope is that the IMF dollars extend the grace period and allow him to be competitive in 2019.”

Persistent risk

Macri’s administration faces the new year with a difficult situation which might cost him his re-election in October 2019. The damaged economy does not seem to be recovering anytime soon, even after the harsh adjustments that his government applied and the massive parade for the G-20 summit. This compels Macri’s administration to reach agreements with the Peronist opposition, a scenario that would damage further the president’s re-election aspirations.

In the midst of many skeptical questions from national press over the consequences of the G-20 summit for the economy of the country, Miguel Braun, Secretary of Economic Policy, argued that Argentina has a short-term need to get out of the financial turmoil. “We are starting to come out, but we still cannot claim victory, we have to remain very focused on complying with the program we have set for reducing the fiscal deficit and stabilizing the exchange rate and prices”.

However, Argentina remains a risky country in which to invest. This shows one thing: even though the economic situation is not favorable for investors, the main concern that buyers of Argentine bonds have today is not economical, but political. Many investors are still skeptical, as the Cambiemos’ administration is unlikely to remain in power for long and therefore the country risk remains high. The G-20 was a crucial test for Macri to show his ability to promote a united idea for all Argentinians, but it seems that the last breaths of hope for Macri’s 2018 will not be enough to change the mind of a bruised and tired country.

As originally appears https://globalriskinsights.com/2019/01/macri-argentina-imf-reforms/

Tomas Slangen Velasco holds an undergraduate in International Relations from the Blanquerna School of Communications and International Relations, and a Master of Arts in International Conflict and Security from the University of Kent’s Brussels School of International Studies.

]]>Ramzan Kadyrov’s Unchecked Power in the Caucasus Regionhttps://frontera.net/news/emerging-europe/ramzan-kadyrovs-unchecked-power-in-the-caucasus-region/
Tue, 08 Jan 2019 01:40:19 +0000https://frontera.net/?p=35204Ramzan Kadyrov, leader of the Chechen Republic, has recently sparked controversy with his acts of aggression in the neighboring Republic of Ingushetia. For years, Kadyrov has fostered a cult of personality, solidifying his status as a key player in the cultural and political life of the Caucasus. Kadyrov’s regime has also drawn global scrutiny for […]

]]>Ramzan Kadyrov, leader of the Chechen Republic, has recently sparked controversy with his acts of aggression in the neighboring Republic of Ingushetia. For years, Kadyrov has fostered a cult of personality, solidifying his status as a key player in the cultural and political life of the Caucasus. Kadyrov’s regime has also drawn global scrutiny for its human rights abuses and persecution of the LGBTQ community. Throughout it all, Putin has remained virtually silent, effectively condoning these actions.

Kadyrov’s most recent act of aggression was his orchestration of a land-grab from the the Republic of Ingushetia. Despite his inflammatory actions, Kadyrov’s influence and the loyalty of his supporters continues to grow stronger – a trend that is only bolstered by Putin’s tacit approval. The relationship reveals Putin’s disregard for human rights abuses, so long as there is a maintenance of order in the Caucasus. However, Kadyrov’s continued aggression may ultimately rupture this fragile order.

Putin and the Russian response

Despite his abuses, Kadyrov has acted with effective impunity, going so far as to attempt to “purge” the LGBTQ community from Chechnya. Human rights groups hoped that Putin would intervene, but these calls went unheeded. Likewise, in 2015, when it was reported that an underage bride was forced to marry to marry a police officer, the Kremlin stayed silent. Kadyrov attended the wedding himself. Subsequently, following the assassination of Boris Nemtsov in 2015, it was believed that the suspects had direct links with Kadyrov. Yet again, there was no condemnation from Putin.

Russia’s response, or lack thereof, to Kadyrov’s oppressive reign, is underpinned by several political considerations. Kadyrov serves a number of important roles, including as a guarantor of political stability in Chechnya. Presenting himself as an envoy to the Muslim community, and a sports enthusiast constantly surrounded by celebrities, Kadyrov has developed a cult of personality. As a result, the Kremlin fears that attempting to replace Kadyrov would generate animosity in the region, and possibly spark another separatist war. Moreover, Kadyrov has repeatedly declared his devout support for Putin, and has shown an ability and willingness to conduct Putin’s dirty work. This is a particularly important consideration in Russian military strategy, as demonstrated by the Chechen involvement in the armed conflict in the Ukraine in 2015.

A tenuous dynamic

It stands to reason that Ramzan Kadyrov is an important figure for Putin. Moscow is unlikely to condemn his actions – especially his persecution of the LGBTQ community, as defending gay rights is far from a Kremlin priority. Furthermore, their regimes are symbiotic. Putin is the guardian of Kadyrov’s power, and Kadyrov has frequently demonstrated his subservience to Putin, whom he relies on for substantial subsidies. Last year the Chechen leader claimed, “he was ready to die for Vladimir Putin.” In return, Kadyrov will remain untouched so long as he continues to pledge loyalty to Putin. However, it is critical to note that Kadyrov’s autonomy is a necessary condition for the relationship. If Putin were to be stricter on Kadyrov, he would diminish his stature and weaken Kadyrov’s ability to quash separatism in the region.

Nonetheless, Kadyrov’s recent expropriation of land from Ingushetia with the Russian Constitutional Court’s approval sets an important precedent. This has huge implications for stability in the Caucasus, which has long been plagued by interethnic conflict. Kadyrov now has his sights set on Dagestan, where a significant minority of Chechens live. With Putin remaining silent on Ingushetia, Kadyrov is all the more likely to intervene. This renders the future of the North Caucasus precarious, and at a real risk of a consolidation of power under Kadyrov. Any sort of further expansion will generate fear, and potentially resistance, in the neighboring republics. Those who oppose Kadyrov within Chechnya and the region more broadly are increasingly vulnerable to unchecked persecution. Furthermore, there is a moderate risk of violence breaking out from Kadyrov’s expansionism. This could lead to a broader conflict, and ultimately damage oil and gas routes from the Caspian Sea. Ultimately, barring a seismic shift in the dynamic, the Kremlin is unlikely to stand in his way.

Kavar Kurda is a graduate of University College London, obtaining his BA in Politics, Sociology and East European Studies. He is currently studying his MSc at London School of Economics and Political Science in Empires, Colonialism and Globalisation. He has previously worked in Parliament, the Kurdistan Regional Government Office and London-based think-tank, Institute of Ideas. He speaks English, Kurdish, Russian and Arabic and has a deep interest in Caucasian and Middle Eastern affairs.

Kavar Kurda is a graduate of University College London. He has previously worked in Parliament, the Kurdistan Regional Government Office and London-based think-tank, Institute of Ideas. As originally appears https://globalriskinsights.com/2018/12/kadyrovs-unchecked-power-caucasus-putin/

]]>Myanmar Proceeds With China Backed Mega Projects As Degradation of Western Relations Continueshttps://frontera.net/news/asia/myanmar-proceeds-with-china-backed-mega-projects-as-degradation-of-western-relations-continues/
Tue, 08 Jan 2019 01:14:35 +0000https://frontera.net/?p=35200After years of interrupted progression with Chinese-backed projects the Myanmar government has agreed to speed up progress. This signals that relations between China and Myanmar are good and that Myanmar is seeking the foreign investments it needs to improve its economy. Between the Economic Corridor and the Belt and Road Initiative After meetings that took […]

]]>After years of interrupted progression with Chinese-backed projects the Myanmar government has agreed to speed up progress. This signals that relations between China and Myanmar are good and that Myanmar is seeking the foreign investments it needs to improve its economy.

Between the Economic Corridor and the Belt and Road Initiative

After meetings that took place in late November, between China’s National Development and Reform Commission deputy head Ning Jizhe and Myanmar’s State Councillor Aung San Suu Kyi, Myanmar has decided to proceed with developing the China-Myanmar Economic Corridor (CMEC). This includes the development of all Belt and Road Initiative (BRI) projects such as the Kyaukpyu deep-water port, the Kyaukpyu-Kunming highspeed railway, special economic zones and natural gas pipelines.

A CMEC implementation committee will now look to establish fast progress on all potential CMEC projects throughout the country. To aid this progression Beijing initiated peace talks with the Myanmar government and the Northern Alliance – groups that did not sign the Nationwide Ceasefire Agreement. Since the talks took place earlier this month the Northern Alliance has agreed to cooperate in government peace efforts. This is significant as it is this political and security instability that has put the CMEC projects at risk in the China-Myanmar border region.

Economy and sanctions behind the sudden change

For the past year or so leaders in Naypyidaw have refrained from fully committing to the Chinese backed infrastructure projects due to holding debt fears. These fears are rooted in the risk of becoming economically over-dependent on China through accumulating excessive debt. Additionally, there are concerns that economic dependence would allow China to gain serious influence within Myanmar’s political affairs using the debt to coerce decisions.

Under economic pressure Myanmar has been seeking foreign investment in order to stimulate its weak and stagnant economy. However, attracting investment from overseas has proved difficult for Naypyidaw because of the crisis in Rakhine state which has meant that western states have been reluctant to publicly support Myanmar. This trend can be shown by sanctions and other financial instruments used by the World Bank and the UN to discipline the country.

The country has recently relied upon diplomatic support from Beijing amidst considerable pressure and criticism from the West as a result of the conflict. This has most likely informed the government’s recent decision to now back the BRI infrastructure and investment opportunities.

Significance for the BRI

For the BRI it signifies the opening of a strategic economic corridor connecting Western China and the Indian Ocean. It demonstrates that the idea of the BRI and economic interconnectivity across the Eurasian continent is taking hold more strongly in China’s periphery. This is particularly important as many countries, including Myanmar, have expressed serious doubt as to the intentions behind China’s suggested investment and infrastructure projects.

However, Beijing has expressed its fears with respect to the political stability and security of the border region, which could cause disruption to construction and prohibit the investments realizing their full potential.

How will this effect Myanmar?

This development suggests that China and Myanmar will enter a stage of closer relations, both politically and economically. This will prove crucial for Myanmar for it to keep its economy afloat in the short term as it continues to struggle to attract foreign investors from the West. Naypyidaw will also hope that aligning themselves closer to Beijing will gain them some political favor in the future.

The future benefits of the increased investment into the specific projects such as the Pathein Industrial City, the proposed New Yangon City and the completion of key infrastructure projects could become the economic stimulus the country needs. This depends on the success of both the delivery and construction from the firms awarded the contracts but also on the political stability of the border region.

Financing is set to predominantly come from China but Myanmar’s recent approval of lending from foreign banks may provide a future solution to diversifying the risk of being too dependent of Chinese investment. Despite this positive outlook there still remains fears that the continuing degradation of Myanmar’s relations with developed western economies, will result in it being extremely difficult to receive the sort of capital investments it needs for these projects to be a success and to prevent over-dependence on China.

Charles Williams has an MA in International Political Economy from King’s College London and specializes in China’s international relations with a particular focus on the Belt and Road Initiative. Article as originally appears https://globalriskinsights.com/2019/01/myanmar-set-embrace-xis-belt-road-initiative/